In Indonesia, successful democratisation from military authoritarian rule has pushed the military ‘back to the barracks’ and restored the rule of law. This process of moving from authoritarian-military to civil-juridical authority has taken place in multiple ways across the political system, however most notably in the rise of the police as an institutional actor, the restoration of their authority over domestic and national security and law enforcement. Scholarship shows how criminality and the criminal contingent have been crucial in every way to state formation in Indonesia. Throughout history, the security institutions have mediated those forms of criminality and the state’s overarching relationship with the illicit. One of the ways the relationship between the state and criminal practices has manifested itself has been in the mechanisms of illicit extraction and accumulation broadly known as “corruption”. Despite the regularizing effects of democratisation, the security sector continues to be resourced primarily by a vast illicit economy, called the off-budget economy. I show how Polri’s new authoritative role in security and law enforcement has opened up the spoils of this economy to the police in two important criminal economies; the gift economy of indigenous Chinese traders and the illegal gambling economy in Jakarta. This thesis demonstrates how the transformation from military-coercive to civil juridical modalities of power has not improved the quality of Indonesia’s democracy or rule of law. Rather, democratisation has caused a restructuring in the political economy of security and facilitated the rise of Polri as a perverse political actor within the Indonesian state and society. The intimacy of the Indonesian state with illicit practices has been reconfigured anew.

This thesis examines the efforts to introduce governance reform and anti-corruption measures from Indonesia‘s independence in 1945 until the end of the Susilo Bambang Yudhoyono's (SBY's) presidency in 2014. It is divided into three main parts covering Sukarno‘s 'Old Order', Suharto's 'New Order', and the reform period. The first part discusses how the newborn state of Indonesia balanced asserting its independence with efforts at institution building. It analyzes the power struggle between the diametrically opposed nationalist camp led by Sukarno and the administrator camp led by Vice President Hatta. It also examines Army Chief General Nasution's push for anti-corruption initiatives under Sukarno's guided democracy. The second part analyzes the roots, causes and development of corruption under President Suharto. It looks at how, in the early period of the New Order, Suharto enacted a number of anticorruption policies in response to demands especially from students, how this political alliance ended as Suharto was able to consolidate his political authority, and how this undermined the checks-and-balances system. It also analyses the impact of the increasing corruption on Suharto‘s political capital as the Indonesian middle class demanded greater transparency and accountability, ultimately – along with 1997 Asia Financial crisis – leading to Suharto‘s downfall in May 1998. The third part of this thesis examines the efforts by the post-Suharto presidencies to tackle the legacy of corruption from the New Order period. It discusses the dynamics between the reformists within the executives and legislatures who worked together with civil society and the conservative/pro-status quo groups and oligarchs, as well as the impact of a more democratic political governance structure, the emergence of a free media, the greater freedom of expression, and the functioning of the most effective anti-corruption agency in Indonesia‘s modern history – the Corruption Eradication Commission (KPK). This thesis advances three arguments: First, that despite all the rhetoric in championing the cause, governance reform was never seen as a long-term endeavor and therefore was never applied consistently from independence to the SBY era. Second, the anti-corruption drives predating the KPK in 2004 were mostly arbitrary, with limited impact, selective in nature, and politicized. Third, the establishment of the KPK changed the sense of impunity among the political elites, albeit only in a limited sense. On the one hand, that allowed the KPK to sustain and even accelerate the anti-corruption drive during the two terms of SBY's presidency but, on the other, it left the overall political, economic and social structure and with it the persistent institutional failure that induced and incubated the wave of corruption largely intact.

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Decentralisation has been viewed as one means for promoting citizen well-being by bringing public goods and services closer to local needs. Yet empirical evidence across developing countries shows mixed results. This study aims to examine the association between decentralisation, public services and well-being in decentralised Indonesia. It argues that decentralisation enhances citizen well-being through improved local government capacity better able to deliver public goods and services. With lack of local government capacity and accountability, decentralisation decreases well-being. This study contributes to existing research on decentralisation and well-being in three ways. First, while most studies discuss decentralisation and well-being in a cross-country context, this examines the relationship in a cross-local government context, and specifically within a developing country. Second, while most decentralisation studies focus on objective measures of well-being, this study uses both a subjective measure (i.e. happiness and citizen satisfaction with public services) and an objective measure (i.e. child health and healthcare demand). Third, while most studies use either aggregate or individual analyses to examine the effect of decentralisation on well-being, this study uses multilevel analysis to examine the effect of local government determinants on individual well-being.This study uses unique datasets which combine individual and household level data and local government data. Individual and household level data is taken from the Governance and Decentralisation Survey (GDS) 2006, the Indonesian Family Life Survey (IFLS) 2007, and the Indonesia socio-economic survey (Susenas) 2009. Local government level data comes from the national village census (Podes) 2006-2008, the national election database 2004-2007, the national health database 2009, local development budget and expenditure information 2004-2008, and the consumer prices indices 2004-2009. The main findings show that well-being among Indonesians varies across local governments, and that disparities in both public services and well-being appear between more developed and less developed regions. Well-being is not only associated with individual and household determinants, but also with local government determinants. The results are consistent, namely, that variation in well-being is associated with the capacity of local governments to deliver public goods and services. Citizens report being happier and more satisfied when local governments are able to provide better public goods and services for them (i.e. able to spend more of their budget on providing public services). In contrast, well-being decreases in the face of local corruption and of weak capacity to govern. These findings suggest that improving local government capacity to provide effective policies and good public services is vital to improve citizen well-being in decentralised Indonesia.